It was beyond obvious that Joost, and its European cousin Babelgum were not doing what they set out to do and would sooner or later be up for sale or closure, so it came as no surprise this week when rumors emerged that Joost has been put on the block.
Joost has amassed around 2 million viewers and has added to that 1 million iPhone App Store downloads of its viewer, but these numbers pale into insignificance when you compare it with other online video destinations like YouTube.
Both Joost and Babelgum made the bet that the delivery platform of Peer to Peer was the answer to TV delivery in much the same way that iPlayer for the BBC made such a bet, and later changed it to straightforward streaming. The difference was that iPlayer had all that lovely beloved BBC content, while the other two had the idea that by getting rid of server based file economics they could dominate. And for a while there, before Google bought YouTube and the US broadcasters decided to back Hulu and other initiatives, it looked like they might.
But the last headline we wrote which had Joost in it was back in May 2007 when it took on more funds, and although we have mentioned the technology since then, we were baffled as to why anyone would sign up at Joost, which had become simply a content aggregator.
Joost was brought to life by Janus Friis and Niklas Zennstrom, the same pair that brought the world Skype. In 2007 it took on $45 million of venture capital from Index Ventures and Sequoia Capital. Index was one of Skype’s investors.
The money was supposed to take a technology and turn it into a business with the addition of geographical expansion, localization, and improved service offerings.
Skype took a far smaller round of VC funding shortly after it emerged from stealth and two years later the company was sold for something approaching $3 billion. The idea behind Joost was that it would offer advertising-supported free video channels complete with copyright protection ‘ but streaming video has overtaken this model.
What happened to both Joost and Babelgum is that the authors mistook the technology for a business, and both had to chase around after content in a very web 1.0 manner (going to meetings and cutting deals) rather than acquiring it in a web 2.0 fashion (uploaded by its users).
That turned them into aggregators and the fact that Babelgum has no rumor attached to it about it being for sale is perhaps because it has done a slightly better and more original job of finding video that it not available elsewhere, and sponsors its own film festival, compared to Joost, which has content mostly from US TV.
However both of them have dropped the P2P underlying technology and switched back to being server based video streaming systems, so their current proposition is simply ‘video destination,’ and with a little over 2 million viewers for Joost and even less for Babelgum, they are not popular enough to survive in the current throng of new video sites.
The headlines might have read ‘Technologists drop technology, carry on the business’ as both dropped their one original element ‘ their P2P delivery system.
Joost now appears to be actively seeking a buyer and suddenly believes that it is a technology once again when clearly it isn’t, it’s some servers, some off the shelf software and a customer base, not big, with some advertisers and we cannot see the VCs getting their money back.
It is being hiked around as a cheap method for a broadcaster or a cable company to publish on the web but they can go to any Flash video service and get the same, such as Brightcove.
Time Warner Cable is supposed to be one of the companies interested in buying Joost, but somehow we doubt it.
The move must have been triggered when Sony Pictures decided recently not to renew its license to Joost. The way companies like Sony do deals is that they ask for an up front payment from smaller players and are happy with revenue share deal only where the proposition looks exciting. Hence two years ago Joost looks exciting, now it looks tired.
Babelgum itself launched around the same time that Joost took that last cash injection with money from Italian Fastweb billionaire Silvio Scaglia and it was his vision that meant it looked for less well known, and more edgy niche content.
Similar to Joost it has seen the light and introduced a free iPhone app which has been downloaded 500,000 times it claims, and this has brought it a major sponsor in Stolichnaya Vodka. Since it ditched its own software client Babelgum has grown from 200,000 viewers to over 800,000, so with lower costs than Joost it may continue to control its own destiny for some time to come and may even make the transition from a technology to a video destination, intact. But equally we may see it sold quietly in the next few months.